What is Foreclosure and How It Effects YOU?

Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property to an end buyer.

The foreclosure process begins when the homeowner stops paying the lender or defaults on the loan amount expected to be paid monthly. (Image below) The lender will attempt to get the balance current. The lender after months of the homeowner defaulting will submit a Notice of Default (NOD)and the homeowner has roughly 90 days + 21 days before auction/sale of the property. Once the homeowner reaches auction date the property goes either to a new buyer or REO (Real Estate Owned) and the bank tries to resell it.

How Does Foreclosure Effect YOU?

Now that we understand the process of foreclosure, let's see how it effects the homeowner. Once the property is foreclosed on you may think, "Now I can go on with my life." There are some repercussions or consequences to consider:

• Negative Mark on Credit Score

Having a negative mark on your credit will not only hurt your credit score but make it difficult to apply for housing, credit and/or employment.

• Difficulty Getting Another Loan and/or Assistance

Lenders like Fannie Mae prohibit those with foreclosures from getting a mortgage for 7 years. You may also lose relocation assistance or leasing opportunities.

• May Owe the Lender

When a bank enters the REO step shown above, they will have to resell. If the purchase price does not satisfy the loan balance then you could still be responsible for the difference.

But....There is a Way Out

Understanding these consequences does not mean we need to accept its fate. There are a number of ways to AVOID foreclosure.

If you are struggling with your payments as a homeowner, I get it, it's overwhelming and you feel like your drowning. We may be able to help you. Click the button below to view the 5 Options When Facing Foreclosure or complete the info below to get in contact with us.

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